Saudi Arabia Is Sick Of Hearing The U.S. Talk About Energy Independence

Former Saudi Arabia ambassador Prince Turki
al-Faisal takes out a rhetorical bazooka and aims it right at
Barack Obama and his administration in this month's
Foreign Policy magazine.

In a blistering essay, he calls Obama a demagogue, and says the
United States is heading for a "disaster" if it continues leading
its people towards the "mirage" of energy independence.

Al-Faisal thinks that Obama paints foreign energy producers with
too broad a brush. He makes it seem like oil producing nations
are nothing but evil, and damage the United States. Al-Faisal
says Saudi Arabia has regularly helped America by cranking up oil
production when global markets would be "jittery"--after the
Iranian revolution, during the first Gulf War, and after
September 11th.

While Americans are confused and angry about spiking oil prices,
they'd be better off looking inward,
says Al-Faisal:

High oil prices have undoubtedly given those calling for U.S.
energy independence a new talking point. But here, too, it's
important to understand what is really going on. Following the
irrational and unsustainable price spike of the past few years,
Saudi Arabia undertook investments to make sure the world would
not be surprised by such a supply failure again. After investing
almost $100 billion to reach 12.5 million barrels per day of
sustained capacity, today we hold about 4.5 million barrels per
day of spare capacity (or more than 90 percent of the global
total), enough to replace the second- and third-largest OPEC
producers overnight if the world needed more oil.

We admit that, like the United States and other countries, we
were surprised by the way prices escalated in recent years. Many
people blame demand from China and other emerging markets. But
the sad fact is that four oil-producing countries failed to live
up to production expectations. In 1998, Iran, Iraq, Nigeria, and
Venezuela were producing 12.7 million barrels per day. Everyone
-- including major companies such as BP and our own planners at
Saudi Aramco -- expected them to be producing 18.4 million
barrels per day in 2008. Instead, due to civil strife, failed
investments, or in the case of Iraq, a U.S. invasion, they were
producing only 10.2 million barrels per day. That drove the price
part of the way up. Then speculators, in the form of hedge funds,
did the rest.

Another factor in rising oil prices is the shortage in the
world's refining capacity. In the United States, for example, not
one new refinery has been built in more than 30 years. Add to
this problem another: "boutique oil," the different grades of
gasoline required in different localities. I encountered one of
these anomalies when I visited Chicago three years ago. There is
an oil refinery 50 miles from Chicago, but it does not supply the
city with gasoline because the grade does not comply with
Chicago's standards. Instead, Chicago has to import its gas from
the East Coast. Prices at the pump would be much lower if there
were direct supplies from the refinery to the city.